Tuesday, May 31, 2016

What exactly happened to Mayor Tony Yarber's mortgage? The Clarion Ledger published a story with the headline "Mayor's mortgage vanishes after election". However, the actual vanishing was a forgiveness of the mortgage by the lender. Anna Wolfe reported the details of his mortgage in a story that was thorough in the actual details. The article stated the Mayor's mortgage was released by Wells Fargo in April 2014 after he had not paid it for several months. It even included an audio recording of the Mayor describing his travails at the time during a sermon. However, Hizzoner responded to the story on Facebook:

It's disappointing that the Clarion Ledger is continuing to allow
unethical journalism to happen. Especially with misleading headlines
that give the impression that an
impropriety has taken place. A headline that states Wells Fargo won't
say whether the house was paid for or forgiven is a gross mismanagement
of the public trust, especially when the reporter Anna Wolfe was
provided documentation by me from Wells Fargo that CLEARLY states it was
a FORGIVENESS. In the past, I've allowed all types of things to be
printed by both the CL and the Northside Sun that created clouds of
mischaracter-ization. But, this is notice that it ends today. Any attempt
to steal God's glory is an offense to Him. So, I'll let Him instruct on
how to proceed. Stay tuned. TGBTG

What exactly did happen to his mortgage? Mortgage's are JJ's specialty so this correspondent made a trip to the courthouse last week and dug up the records on the Mayor's home (they are posted below.).

Mayor Yarber purchased his home in 2002 with a $63,110 FHA loan from Union Planters Bank. It was amortized for thirty years. It is not known what the payments were but JJ will attempt to provide an estimate through some reverse engineering. The 30-year interest rates in 2002 were in the range of roughly 5.5% to 6.0% although they fluctuated higher during the year. The payment would be approximately $380 per month if the interest rate was 6.0% (using the Bankrate.com mortgage calculator).

A new deed of trust states that the Mayor refinanced the home in 2007 with Wells Fargo for $92,872. The principal increased by more than $30,000. The article states it was $40,000. JJ was not able to independently verify that figure but will assume it is true for the purposes of this post. Such a substantial increase in principal means the loan was probably a cash-out refinance. The loan was amortized for forty years. The loan had a fixed-rate amortization as the box for the ARM option is not checked. The deed of trust does not state the interest rate nor the amount of the monthly payment. However, a 40-year mortgage in 2007 was usually considered to be a non-conforming loan.

Wells Fargo filed a deed of release on May 16, 2014. Mayor Yarber provided a copy of the letter cited by Ms. Wolfe in her story. The April 29, 2014 letter states:

We're writing to let you know that due to inactivity on the above mortgage account, we are releasing the lien on your first mortgage with us. This means we will forgive the unpaid principal balance on your first mortgage loan and release you from any obligation to make payments on the loan now or in the future.

There was no substitute of trustee notice filed at the courthouse. A lender files this notice when it is getting ready to foreclose on the house. A substitute of trustee notice means the lender chambered a round and has the finger on the foreclosure trigger.

So the nutshell version of the story is the Mayor got a typical FHA mortgage in 2002, refinanced it on a forty year amortization as he cashed out the equity, and then in 2013 stopped making payments for whatever reason. The bank forgave the loan on April 29, 2014.

The term "vanishing" was probably misleading as it gives the appearance that the story reports someone paid off the mortgage for the Mayor. Such a payoff would be highly suspicious and raise more than a few questions. However, the actual story delves into the details of the transactions and provides more accurate information. It is about a Mayor whose mortgage was forgiven by the lender, not paid off by someone paying to play. The term "forgiven" probably should have been used.

Kingfish note: That was the reporting on his mortgage, now for some opinion. The Mayor is a big boy and knew when he ran for office that his public records such as the mortgage would be examined. His financial judgment and record on matters such as this is fair game for criticism. If JJ is going to report on Frank Melton and his mortgages, it is only fair to report on Mayor Yarber's mortgage. However, the lack of a substitute of trustee notice gives credence to the Mayor's statement that the bank forgave his mortgage.

45 comments:

One wonders whether hizzoner properly documented his '14 tax return with accompanying 1099 from wells fargo establishing the "mortgage debt forgiveness?" After all, such "debt forgiveness" is deemed income to the debtor, is it not? I'm sure hizzoner properly accounted for that "deemed income" on his '14 return and, like all those other social justice warriors out there, paid his "fair share."

Anyone who would basically refinance a home for FORTY years has no business managing a city of any size. This speaks volumes about Jackson's fiscal condition. No wonder Wells Fargo makes a lot of money.

Why are people so suspicious. Everyone knows any bank or mortgage company is in the habit of forgiving many loans. Happens all of the time. I can't understand how they stay in business when they forgive so many loans. Bless their heart.

How could anyone argue that the public shouldn't know about this?Yarber is apparently incapable of making a modest house payment. If the man can't take care of his personal business he can't be trusted to manage a large city. He was also dumb enough to boast about it. Wells Fargo must have realized they deserved to take a loss on this one for granting the loan in the first place.I wish that I could stop paying my house note and the lender would just forgive it. Then I wouldn't have to work so damn hard.

WF should have issued a 1099-C for the cancellation of the debt since it was not a foreclosure. There are certain exceptions such as foreclosure or debt forgiven through restructure, as provided by The Mortgage Debt Relieft Act of 2007. Someone might want to forward the screen shot of the letter and download Form 3949-A (Information Referral) to the IRS if they believe he has not reported. You can anonymously report suspected tax fraud. IRS will take it from there.

Folks..if WF does not report it as income, it is not income. Its that simple.

The settlement WF reached with the AGs over loan structuring and how they applied payments to the escrow (or not) probably included WF not reporting this as income to the "victims" of the transgressions.

Its not an accounting issue as much as it is a legal issue.

Now "should" Yarber be held accountable from a hypothetical perspective? That is up for debate. Can you be jealous that he seemingly got a windfall (even though you don't know any of the facts and just assume the worst)? Sure....be jealous all you want...and hateful..goes right along with this blog.

I know nothing about the Yarber situation, however I do know that financial INDUSTRIES caught by the Feds with unlawful practices do "forgive" debt. The credit card industry, owned by the banks, have made billions of dollars of forgiveness on credit card accounts due to a consent decree agreement in the 90's

This mortgage was likely made by a mortgage broker and sold to WF. These 40 year mortgages were abusive and were target of the Obama admin push to forgive principle. In 2012, Obama began putting the big squeeze on the banks, because up to that point, they had been dragging their feet on helping out underwater homeowners. I'm sure that WF looked at a 100K house underwater in a bad part of Jackson on a 40 year mortgage and decided that they would net zero on a foreclosure and simply wrote off the balance as part of the settlement, since the Feds directed them to forgive billions in principle.

Me personally, I took out a "stated assets, stated income" loan from Chase before the crash. I tried to get it refinanced starting in 2011, but was always told no because I was 1)not underwater, 2) current on payments, and 3) Had a home equity loan on the property. And anyway, my credit got shot and I told Chase that they would have to refinance with no income or asset verification and a credit score around 600. But after the Feds started putting the squeeze on Chase, I got a call one day in late 2012 where Chase said they were refinancing my loan at no cost, no verification of anything, don't worry about the Home Equity line, credit score at 600 no problem. Next day my rate dropped from 5.25 to 3.50. They sent a guy over to my office to sign paperwork and the whole thing occurred in 1 day. I didn't initiate any of it. So I believe Tony Yarber when he says that Wells just wrote his loan off in the blink of an eye - it was happening to others like me.

My house payment was cut $600 per month. It gave me a tremendous amount of cash flow help when I needed it most, and gave me the room to pay off other stuff and get my credit score above 720. So I too was thankful for the divine intervention on my behalf.

From 2009 to 2011, the banks put the screws to everyone who was vulnerable. They canceled credit lines, raised interest rates, and made it impossible for the little guy to borrow. I don't have any sympathy for them, and as far as I'm concerned, the financial penalties should have been greater.

It's a shame the remainder of the Wells Fargo is not available. One suspects that a notification of the tax implications of the "forgiven debt" is contained on page 2 along with a statement that WF would be providing a 1099 at year's end. Perhaps a complete copy of the letter can be obtained and posted?

With few exceptions, debt cancellation is income, regardless of whether it's reported on a 1099 or not. However, if someone is insolvent immediately before the debt is forgiven, then you can reduce the taxable portion to the extent of insolvency. Insolvency is basically adding up the fair market value of every thing you own, and then subtracting your total debt immediately prior to the forgiveness. If it's a negative number, that's the amount of debt forgiveness you can exclude from income. Signed, a CPA in tax practice for over 30 years.

3:53pm Thanks for trying to explain. Unfortunately, few read the story and the comments .And, some are too young or too inattentive to remember more than a few other CL stories from the late 70's and early 80's of state politicians' loans ( not mortgages) being " forgiven".But, I guess if you liked the guy and voted for him, you thought forgiving campaign debt was OK.Here's a news flash for some of you, some folks get lower rates for bank loans even when their credit score is the same as yours.

One other note from my post @ 3:53 - one reason Chase was so quick to refinance besides the govt. pressure is that the going rate for conforming loans with good credit when I got my gift refinance was 2.90. So chase turned around with my new 3.50 loan and sold it to a mortgage pool for about a 7% profit. Banks needed to get these non-conforming loans off of the books. They were wrapped up in CDO's which were sinking, and investors like PERS of Mississippi (which had tens of millions of this junk in their portfolio) were asking to be made whole. If you haven't seen the movie "The Big Short", it is worth renting on your dish/cable/directTV. The whole mortgage finance industry had gone crazy.

7:33 - The question was whether some or all of the debt forgiveness is taxable, and the answer is yes, as adjusted for possible insolvency. Period. The question of whether he will have to pay may be decided by an audit, which is a remote possibility these days. However if he doesn't report it at all and gets audited, he'll probably be subject to various penalties, in addition to the tax. I'm fairly certain that WF sent him a 1099, as they're required to do. That being the case, he'll have to deal with it sooner or later.

No need for examples, I deal with this kind of thing regularly. My strong sense is that you do not, as your ignorance with respect to this area is very obvious.

The issue was whether or not the Mayor's receipt of a free house was a taxable event to him.

In his case it was not a taxable event.

The answer is no but not because of conventional rules but by way of statute and independent settlement by and between the parties. If WF does not submit a 1099 (and they did not in this case and in 20 billion dollars worth of other cases) then its not taxable. WF did not send the 1099s because the relief act applicable said it was permissible/required for them to so proceed. In other words the law protected the Mayor and similarly situated "victims" of mortgage fraud. (40 year loan refi, fees, etc.).

So your claim that this event under normal circumstances is a taxable event is probably correct. In this case however, due to the law and agreement of the parties allowed under that law, it is not taxable income.

Why not call and ask the major to clarify? Surely he would gladly want to clear this up by simply stating his mortgage was one caught up in the messthese lenders ended up in after the Clinton admin made the banks loan to people who could not afford the loans.VERY simple for him to clear all the talk.

That is the very one 2:41. I was being sarcastic. I just read the story in the clarion and it read like yarber thought his situation of not paying his mortgage was funny. His comments were unbelievable--the cavalier way his statements came across shows to mehow much so many of "our leadership" in Jackson have no shame in the corrupt why they do business--private or public. Far worst to me is that the majority, apparently, of the citizens of Jackson DO NOT CARE and/or do not understand the consequences. I got the impression Yarber and/or the reporter was implying that Wells Fargo was at fault for making this loan in the first place WELL Yarber had to know at the time he could not pay the loan back and was getting in over his head yet he went ahead anyway. It paid off in a big way for HIM not so much for the rest of us who end up having to pay more to make up for his and others defaulting on loans. Yet another example of the ALL RIGHT I got something for free mentality.

1:45, that is the mind set of most of the people in Jackson. Anything they can do to get something for nothing is what they understand best, especially if it may be white people they are getting it from. Yarber isn't any different than Stokes. It is always the fault of others, never anything they may have done.

Who is the Hottest Reporter in Jackson?

Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything). Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up. In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.Note: Security provided by INS.

Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!